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On August 28, 2020, U.S. Customs and Border Protection (CBP), Office of Trade issued internal interim guidance to the Ports of Entry regarding the computation and request of new and annual sufficiency reviews of Foreign Trade Zone (FTZ) operator bonds.
The interim guidance serves as a supplement to Customs Directive 3510-004, Monetary Guidelines for Setting Bond Amounts, dated July 23, 1991 and takes precedence over FTZ Manual - Section 12.2. This guidance will remain in effect from the date of issuance until either updated interim guidance or an updated directive is issued with a risk-based FTZ operator bond formula. CBP will be pursuing a risk-based FTZ operator bond formula as part of a larger risk-based bonding initiative.
FTZ Manual, Section 12.2, states:
“the initial FTZ operator bond will generally be in the amount of the duties and fees owed on the average value of foreign status non-duty paid merchandise held in the zone and the bond should be evaluated on an annual basis.”
Customs Directive 3510-004 states:
“Activity 4 - Foreign Trade Zone Operator – Continuous: When the bond is for a Foreign Trade Zone operator, the bond limit of liability amount shall be fixed in an amount the district director may deem necessary to accomplish the purpose for which the bond is given, but not less than $50,000.”
While discretion is an important aspect in setting bond amounts, the principles of national uniformity or standardization must also be followed regardless of the particular technique or formula used to determine the bond amount. Setting the amount of a bond must not be an arbitrary action.
Effective August 28, 2020 the following interim guidance applies to FTZ operator bonds:
- Ports of Entry may only require a $50,000 FTZ operator bond for each initial FTZ activated location.
- If the FTZ operator is filing a bond for an individual FTZ activated location, the bond amount on file must be in an amount not less than $50,000.
- If the FTZ operator is filing a consolidated bond to cover all FTZ activated locations nationwide, the bond on file must be in an amount not less than $50,000 for each activated FTZ location.
- A new bond may be warranted under the following circumstances
- the activated zone area is substantially altered per FTZ manual, Section 4.11;
- the character of merchandise admitted to the zone or operations performed in the zone are substantially changed;
- the annual review reveals that growth in estimated liability exceeds 10%;
- a zone violation(s) or potential violation(s) is deemed a threat to the revenue or proper law enforcement; or
- any other reason substantially affecting liability of the Operator under the bond.
• If a new bond is required, the Office of Finance, Revenue Division, will issue a letter to the impacted parties indicating that the current bond is not sufficient and must be terminated and replaced with a new bond. No other type of notice from the Port of Entry or other CBP office will serve as official notice of insufficiency.
If you have any questions or concerns, or receive instructions from a Port of Entry to the contrary, please contact Bond Policy within the Commercial Operations, Revenue and Entry (CORE) Division at otbond@cbp.dhs.gov.
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